>> the gains on asset sales were unexpected. earnings fell on the quarter relative to prior. >> thank you very much. that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street." good thursday morning. welcome to "squawk on the street." i'm melissa street alongside of jim kremer. we'll see you later on on the show. we are poised for a rally. you can call this t draghi rally. the ecb offering its boldest defense. we do see green arrows. the dow looking at 167 at the open. as for europe, germany seeing a 1.8% rise in fran's cac seeing a 30% gain so far on the section.

roadmap starts with that rally by draghi. the ecb president said he will do whatever it takes to preserve the our ro. could this come just in time for the life of dow chemical. >> exxon mobil's quarterly profit jumped 49%. the share was below estimates of $1.95. >> zynga gets zinged. that sent shares of facebook lower premarket ahead of its first earnings report as a publicly traded company. >> mario draghi said the ecb will do whatever is necessary to prevent the eurozone from collapse. his comments coming in an investment conference in london. >> the last summer was a real success because the first time in many years that all the

leaders of the 27 countries of europe, including u.k., said that the only way out of this present crisis is to have more europe, not less europe. >> all right. meantime, citi out with a report saying it believes there is a 90% chance greece will exit the euro in the next 12 to 18 months. that's up from 50 to 75%. greece is not really the key concern. it still comes back to spain and then italy borrowing costs for which have moved up appreciably during this week but are down, as you might expect. strong comments from draghi. europe continues to be a drag -- well, it's just a drag, man, on everything including a lot of corporate profits. >> not to get into the nitty-gritty of yield, but we've been talking about how spain's borrowing costs have gotten out of control. the yield has gone down dramatically.

when i hear what draghi said, it reminds me of what ben bernanke said before he embarked on this trillion dollar bond buying program. the similarities are this. it's malcolm x. it's by any means necessary. you go back. google malcolm x. by any means necessary. speaking about definition. but this is the code of, all right, i'm taking this matter in my own hands. the difference is is that we're one country. >> right. >> if germany says something different about draghi today, it leaks at 2:30 today, this whole rally disappears. let's remember, this is not one country and there's not one federal reserve. >> that's a very good point. we so often have seen statements during this course of this crisis that rally the market only to have it fade very quickly because either reality rears its ugly head or you get something from angela merkel. >> what's interesting is the

follow-up comment to the ecb comments. sharing more national sovereignty on the e.u. level is also to come. that implies more -- it was going to lead to the deterioration of the euro or a tightening of the bonds. >> however we see that breaking point where there's talk, the 90% citigroup comment, the 7.5% on spanish bonds. whenever we get to the abyss, it falls back and then merkel puts us back at the abyss again. you talk privately with some of the policy leaders in this country, they literally are saying it's merkel's problem. she refuses to let a solution occur. now given the fact that spain's a big bond market, italy third biggest bond market. >> in the world. >> you can understand the trepidation. >> yes. those spanish yields inverted for a while this week. that has corrected for a while. something to keep a close eye on. it's not the spanish 10 year, but it's the 5 year.

>> very big. >> this is helping. has the ecb come in and bought bonds? >> no. >> no. do we have anything really new to base the viewpoint on somehow that things are more constructive? no. >> gold. gold is helping us. >> say that again. >> huge rally in gold. >> it could be inflation versus deflation. let's talk about something a little existential here. this is the biggest reporting day i've ever seen and we haven't even gotten to it yet. it's not worth getting to. that's what's so insane. >> this will lift all votes. >> today there's a short squeeze. dow chemical's too negative. caterpillar was right. i wrote a piece for the street for "real money." you're going over unilever's quarter. it killed proctor. then i start taking a look at the euro. 90% chance that the euro implodes. greece, august 20th deadline. you go through this process that i've never had to do in 31 years which is to look through a currency prism, a geography

prism. why is unilever good? 4% southern europe. you end up in a world where people at home are saying, i don't know, exxon, that wasn't that good. i'm worried about europe. >> well, yeah, everybody's worried about europe. in fact, that has had an impact on the bottom lines of these companies. you pointed it out many times. you have exposure to europe if you're a multi-national and you're a significant business in europe, you've been suffering. andrew liverus who was on "squawk box" was talking about that. the ce dau chemical didn't have a good quarter. they laid a lot of blame on europe. it's in recession. spain has a 25% unemployment rate. other than germany, every economy, including the u.k., which is part of the eurozone but obviously not the euro, it's not good. >> i'll see your euro and i'll raise you one whole futs. people were spending like crazy. the united states.

>> united states. >> that's another one. margin improvement. what do these have in common? they do not have a map on the wall in their classroom that has europe in it. they've got the u.s. i say no more. >> true. but do you change your view of the companies that are exposed to europe given this ecb put in that perhaps, perhaps there is an acknowledgment at least that things must be done in order to save the situation? and so the turnaround that livurs saw, what was so notable is that in stark contrast to what he said the previous reporting season when he saw momentum actually, he thought momentum was happening in the second quarter and would continue throughout the year, this is exactly the opposite compared to what he sees today in today's earnings release. i think that's why people are taking this so seriously. do you sort of temper your mood when it comes to international companies given what mario

draghi said. >> i'm going to layer on a level of -- that the executive is great. he brought the company through. dupont, ellen coleman with a propriety set of chemicals did no complaining. there was no alibi. so i come back and say you can trade dow because of draghi but you can invest in dupont because of coleman. >> fair enough. >> let's get to exxon mobil meantime. pretty messy quarter reporting. 3.41 a share. if you take out all of the items including currency impact, asset sales, etc., etc., exxon actually missed expectations. emp earnings fell 2.4%. exploration and production. this is a very different kind of quarter than what exxon usually reports. it's a very, very messy quarter with a lot of items.

it gave a head fake because people are saying 3.41 was comparable to the analyst's estimates and then when we figured out all the things that need to be taken out of that, it was a miss. >> i didn't like this quarter. i haven't liked exxon for some time, ever since they bought southwest. they bought xtl at the same time southwest is telling you this is a great company. xto, great company. they bought at the top, now they're cutting back their investment in the united states. i'm saying that exxon is no longer the bellwether. it reminds me of a bank, not of an oil company. and i like real oil companies with real growth and it doesn't have it. >> some people will say, jim, exxon mobil has a good dividend yield. 2.7%. it's a safe stock. why wouldn't i stay in exxon mobil. >> i remember at goldman sachs. can you believe i worked at goldman sachs, part of an international conspiracy. >> were you part of the conspiracy then? >> the queen of england, me, the

tri lateral commission, we were altogether. >> that never ends. >> octopus, squid, whatever we were. listen, you'll never make a mistake recommending exxon. they're buying back stock every day. at the same time they never really gave you the dividend boost that makes it good. con niko doesn't give you the growth. 4.5% yield versus the treasury. no one ever went wrong recommending exxon. it's been a consistent player. at the same time, if i want dividend here i go again. i'm going to go to at&t. it was a magnificent quarter. >> that's the adjective you're now using to describe that. >> yesterday was terrific. i used it four times in the script in ""mad money"" yesterday. i over terrificed, terrific. i used massively. he said we've done too many massives, terrifics. >> you're going with another

word today. again, $7.5 billion of the gain was associated with divestments. tax related items. 8.4 billion as melissa said. a bit below what might have been expected. >> what's funny, when you talk to the man on the street or the woman on the street about apple. what is it with you guys? they make billions. when you speak to the man or woman on the street they're going o it say, exxon made billions. why are you critiquing it even? the answer is is that, again, we always do play the expect faati game. when everyone else is boosting the u.s. spin, i said, guys, do you have a game plan? >> they're cutting back spending and selling assets. these are not things you want to do when you're organically growing a company. >> i want organic growth and food. i want whole foods. >> talking about lack of a game plan, let's talk about zynga. it is maker of games including

farmville. it's missing wall street estimates after reporting quarterly results. zynga's numbers putting facebook in the spotlight. we'll hear from that company of course today later in the day. its first report of quarterly earnings. they're expecting a larger than expected dip. they rely on zynga for 15% of their revenue. almost nothing good. >> what have i been tell you. >> too early. >> too early to buy zynga. >> is it still too early? >> yes. >> you have the so-called penguins if you'll allow me. >> citigroup, goldman, morgan stanley. >> march of the penguins. >> a neutral. >> neutral. >> what will get them to go to a sell? >> at this point what's the stock going to be? >> i don't know. i've never bought a coin on skrable. you never by any virtual goods. >> that's my secret. my 21-year-old daughter told me here's the secret to the web. never pay for anything. >> what is the cost of virtual

goods sold? >> couple of bucks for a coin so you can get -- you can -- >> it raises the larger issue. you build a business model on people buying virtual goods. >> exactly. >> is that sustainable? >> farmville. >> at one point when the company went to the investment bankers and said we want to go public, we have a great business model where people make games and they come on and buy goods and they pay us, i'm sure that it was seen as a genius business model at some point. >> it is. >> that's the investment banking model. no wonder these guys loved it. they make nothing, charge a fortune and everybody goes home happy. >> if you are a zynga shareholder, not only are you outraged that the stock popped at 10 bucks, you might have bought it at 14, whatever, but the company gave you no warning. not only did they miss big time but they took down their guidance to a fraction, a fraction of what analysts had expected, 20%, 25% of eps estimate. >> we were looking for 23 to 29.

they gave us 4 to 9 cents. >> incredible. now the other thing, how about the way they threw facebook under the bus. they made it clear. >> it's their platform change that's our problem. >> yes. >> what about mobile? what is this saying in terms of given there's been movement of facebook users to mobile. they don't play many games. >> the mobile is so good if you have the iphone. the iphone. i know you're probably still in the blackberry world. >> i am. >> i am, too. >> if you have the iphone, i've been caught playing scramble by the bosses. >> really, by the bosses? >> by the bosses. they did sell stock. >> he sold a lot of stock. >> i played scramble with him. >> in march he sold $109 million. in april he sold $192 million in stock at 11.64 a share. >> nice timing. >> i thought i was a winner by having beat him three times at scramble. maybe he's beaten me with that. >> he has beaten everybody including the shareholders. >> sometimes this thing's bigger

than money as our friend simon said though i haven't found them. remember what my great, great uncle said. if the rich are unhappy, it's their own fault. >> development costs are up 79% in the quarter. they're saying that people are getting tired more quickly of games so the scramble, the scramble for games is on. >> omg pop. i got tired of playing it myself. >> how long? what, you played it for an hour. >> i played it for two weeks. geez, i've never won that either. i'm such a loser. >> a week is what they say about these games. >> this is a troesh shusz. >> are you some sort of judge and jury? >> yes, i am. >> you're a judge. i'm magnificent. the atrocious seven. is it too early to buy groupon. >> you tell us. >> i think it is. >> you still think it is? >> yeah. did you get your groupon built ton this morning? >> i would be so outraged on so many different levels. >> it is atrocious that this company came to the market --

>> she used the word as well. >> atrocious. >> thank you. >> it's a magnificent example of how not to manage expectations. >> i'm getting half of cirque du soleil today. i've always wanted to go to zarcana. >> talking groupon of course. >> yes. >> in terms of facebook, because obviously we're watching facebook fall in the free market as well. the first report -- of course the big questions here are will they give guidance? will they take the google route and give no guidance and will mark zuckerberg make an appearance? we don't know. >> these are all atraditional companies. they're swearing by facebook to get new customers. i also know that this has been a great debacle. maybe they do a good job. i know that i heard wpp, big advertising firm, talking about doubling the amount of money that it's going to spend on facebook but it's still a fraction of what it's going to spend on google.

if you like facebook, go by google. >> coming up, the earnings picture from photos sharing website, shutter fly. let's take a look at the futures. we are bracing for what appears to be a big rally. the dow looking at 161 points. s&p looking at 18. much more "squawk on the street" straight ahead. 6 ♪ i've seen your picture ♪ your name in lights . ♪ i've s ♪ your name in lights .

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upx shares higher. the d.o.j. and the european commission, that deal gets approval in today's session. so, jim, we've got a lot to watch here. we had a lot of earnings out after the bell. >> it's interesting. let's talk united technologies as an example. people feel they cut their forecast. when you go through it, it's currency. they're a good company and they did not say, hey, listen, guys. we're screwing up. there's a divestiture issue, timing issue. there are so many companies -- i would have loved to have seen what this day would have looked like without draghi. you have a lot of companies, i would have said 3m. they're so so. you have to get some 3m. you have wells fargo, downgrading caterpillar. >> cat was down yesterday.

>> it was up $1.10. it was up $3.20 at one point. but i do come back and say that this is a moment we're going to look back and say winners and losers. i was amazed by unilever which makes me feel a little bit less about proctor. i was amazed at acami. that had been a web play avnet flicks. streaming numbers not that great. there are companies like he can which knocks doing a great job. eqix. there are other companies falling down. i happen to like city citrix. exsi caution, execution, execution. >> absolutely. you take a look at duncan. >> i like duncan. >> it falls into your sort of category of these u.s. oriented companies. 75% of its revenues come from the u.s., 80% of its profits. again, this whole, you know, disparate between u.s. oriented companies, international companies. u.s. oriented companies, duncan,

whole foods, under armour doing well. international count jerlparts not doing well. >> bass kin robbins going to be selling k cup in california. duncan donuts only has 1/5 of the country. duncan is not zynga. >> we've certainly got a lot to watch going into the bell here. coming up next, getting a jump on the trading day with cramer. his mad dash is on deck. it does look like green arrows across the board. we'll see how we open. more "squawk on the street" straight ahead. between listening to the numbers... ...and listening to your instinct. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. and so too is the summer event.

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time for cramer's mad dash ahead of the market open. we want to talk sprint. >> i have a feel good story on a feel good day. one of the nicest and tallest ceos in america. dan hessy has engineered a turn around. this is the turnaround of 2012. this is for real. this is a real game. in other words, $2 stock going to $4. you and i both know fixed income showed you this was going to happen. >> right. you always forget, of course, the market cap is far below the $21 billion in debt that has already turned around in terms of where it was trading. i will tell you just looking at the numbers, we'll have more on this later in the show, average revenue per user was up.

their guidance was far in excess of what anyone anticipated. 3.9 billion to 4.6 billion. >> no one believed it. at the bomb tomorrow even the board didn't seem to believe in dan hessy, notre dame's own, nbc. i like apple. >> you like apple. >> if verizon and at&t try to play hard ball, dan has this. >> you remember when they signed the apple deal, it was where people were wondering whether it was a deal that would potentially bankrupt them. now this is a company that is generating cash. >> $4 per more per customer smartphone. they're almost done with this network vision. this is the stock that is not done going up. i've liked it for a long time. i felt like i was a sucker for a while. it's back. like gandhi 2, it's bigger than ever. >> we're going to talk more

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in london they're celebrating the 2012 olympic games starting tomorrow. you catcha all the action on nb. plavix celebrating its ipo. the big story, the rally we'll see given the comments made by ecb president mario draghi saying they're willing to do anything necessary in order to preserve the euro. >> this is drawing the line in the sand trying to save spain?

>> yeah. drawing the line. drawing the line. >> i was going to give you that. >> now i'm over here. now i'm over here. >> i was going to give you that. >> merkel determines the real life. this is the imaginal line. >> this is gadhafi's line. don't cross that line. >> that's the line in the sand. >> yeah, that's gone. >> well, look, for a day. >> for a day. >> for a day, maybe for a half day. >> for a day this rally looks great. right now the s&p is heighter by 1.5%. we're seeing strength be in technology, materials, home builders, you name it. it's up except for, except for zynga. >> zynga. >> only down 40%. >> only down 40%. the bright side is it -- >> you have 60%. >> sprint passed the $3. sprint, zynga. just a flip. david, i understand what you're saying, and i'm going to go with you longer term.

there is a short squeeze of phenomenal proportions. the spanish five year had inverted in english. people were saying they're not going to give any money to spain. this is one of these things where shorts cover. we're using that as a proxy because they couldn't remember. short the spanish banks. >> which had a 93% drop in profits. >> yeah, they took a lot down. >> they made money though. ever since they switched their symbol from std to sam. >> it feels healthier. >> has a better feel. >> doesn't make you feel -- >> okay. so gold. seeing a big rally. rallying to three-week highs. this is the biggest one-day gain in gold since late june. we're seeing a lot of impacts of the precious metals, industrial metals seeing a bid. the dollar moving lower. the euro higher by 1.2%. these are big moves in the currency markets. you're seeing moves more than 1% on any currency. >> i'm glad you're highlighting gold. >> used to be the bellwether.

it is up 8%. yamata up 4%. all the gold stocks. i do not like the gold stocks, but for a short squeeze trade here, holy cow. >> yeah. >> facebook as you might anticipate, down about 5%. we're going to hear from the company after the bell today. first quarterly report as a public company. >> did you hear -- >> largely if not solely on concerns generated by zynga's terrible quarter and concerns about the mobile transition. excuse me? >> big seller on the trading desk for facebook right now. piper, which i look -- i'm giving you the other side of the trade which i don't like. piper is saying ignore zynga. it's not as important as it used to be. >> it's going to be less important every day. >> as we speak, actually. >> well, remember, when you own zynga you play with those virtual coins. you don't play with real dollars. it's like big coin. >> unfortunately it's a real stock that people own. >> yes. you do use real money. >> it's not virtual losses.

>> the ipo. it's perceived real money when he sold $300 million worth of stock. >> yes. he got real money. >> do you think it's too early to buy webb man data? >> i i this it's time to step up to the web band plate. >> sound the alarm. pay attention. david said it's time to buy web band. >> i move glacially. yes. >> by the way, i point out a very broadly positive take. netflix down 2.5% following yesterday's significant losses there. one of your favorites, groupon, is down 5%. >> groupon, look, groupon is the kinds of sizzling stock that defines why people leave this market in droves. these investment bankers bought these stocks. they are just a -- they've been a blitght on the retail investo. it never ends. >> no, it doesn't.

>> we're joking about virtual, but there's a real problem with this company. if you're an investor out there you're outraged. you feel like you were thrown under the bus by management. you were given no indication of the tremendous takedown in terms of the guidance down to a fraction of what analysts on the street were expecting. this is an example of just poor investor relations. if you're an investor out there you have to be questioning what management is doing. >> zynga, do they come up with a new game? is it possible that something attracts a great deal of interest and they figure it out? it could turn quickly. >> it could. it turned the dow. >> the dow 238 points. we've got a lot of companies that people were worried about. look at united technologies. everyone was so worried about this. up 3%. i find this theme of these big cap companies being able to transcend. you know my old favorite, johnson & johnson, david, up 1.7%. who has to look at this, procter & gamble. on the strength of unilever, they're taking share from

proctor. this is an all things look good morning. >> ford and gm are up despite what is terrible european business. ford we've already seen. gm we're still waiting. >> horrible. >> take a look at western digital. huge gain on this stock. up 20%. >> 20%. >> aggressively moving forward. 2012 eps estimates, 10 bucks a share. analysts were expecting it. they're recovering in the floods. they've bought a lot of assets from hitachi. this sector, this company had been left for dead for quite some time. trading historically low multiples compared to itself to the industry remember david ianborn. one of his largest competitors was seagate. >> my old hedge fund doesn't exist anymore. these are plays on supply/demand. the moment that supply overwhelms demand, which is what happened with western digital, the stock gets crushed. the moment that demand catches up with supply, look at these

kinds of moves that you get. it's funny. people would say buy dell. go by intel. these have to do with supply and demand of a particular part of an industry. david, hewlett-packard, cannon is down in terms of printers. >> we have lexmark and cannon going lower or posting lower results. >> yeah. hewlett not out with results yet but that's been very tough. >> good day today. as it is for many things out there, the euro close to session highs. breaking 123. 123.06 on the euro. no coincidence. we are at session highs. the s&p now up by 1 3/4%. what a rally we have. the dow up by 1.9%. with that, let's head over to bob. >> what i care about is what earnings are looking like in the second half. i am not a happy camper. i do not like this week at all. i'll show you numbers. none of that matters. up 230 points on the dow because the central banker pull the is

what matters over earnings. we used to call it the bernanke put, it is the bernanke draghi put. everybody is quoting this one line of what draghi said. i'm going to quote it to you. the ecb sms draghi will do whatever it takes to support the euro. it will be enough. more importantly what he says deeper in the speech. i'm he going to paraphrase it, i, mario draghi, am in power with making sure that monetary policy as we create it flows smoothly. monetary policy is now being hampered by the high borrowing costs and i have the power to do something about that. do you understand what this means? he's going to do an end run around a lot of the restrictions he has, specifically the restrictions on not being able to buy off vern debt directly. draghi today laid the legal groundwork for much mora gres sieve action. number one, more aggressive bond

buying not just in the secondary bond market and reviving that old program, maybe evenly direct bond buying. secondly, expanding the ltro. maybe a third ltro program. number three, a banking license for the esm. fourth, the big bazooka, printing money. he's not going to be hammered by any legalistic framework they have. let me talk about the earnings picture. i don't like what i've seen. i don't like what's happening with exxon. their outside numbers are skewing the earnings estimates for the s&p 500. i'm trying to get standard & poor's to recognize this. 15.8 billion in revenues from exxon. that includes $7.5 billion gain from tax-related items. here's the problem. it doesn't look like the analysts have those numbers in there. it looks like they took them out as well. as standard & poor's is including it in the overall earnings number. they're including the higher number with the tax-related gains. it's skewing the numbers. look what's happened.

the s&p 500 second quarter numbers. got half the companies reporting, 260 or so. earnings are up 2.6%. today that's because of exxon mobil. they're including that $7.5 billion. if you take it out, i asked them to take it out, the earnings numbers for the s&p go down to minus 0.7. that's a huge number. statistically significant. that's what an additional $7.5 billion if you throw in the earnings picture will do. >> they have told me they are reviewing this now. my position is it doesn't look like the analysts are in there. the number should be taken out and we should get a more accurate reflection. as of now it's in the analysts overall. jim, the numbers on the second half which is what i care about are continuing to come down. right now the third quarter numbers are flat, the estimates. they were up 6% just a few weeks ago. the fourth quarter where we're expecting really big earnings gains, they're now at about 11.6%. three weeks ago we were at 16%. so every day, every single day

in the last week, week and a half those numbers have been coming to the down side. i'll let you know what standard & poor's has to say about exxon. >> couldn't be more right and it shows you the difficulties is that one man says something, draghi, if it's subtracted by angela merkel, you'll go back to what bob is talking about. the stocks go lower. that's the dynamic that has been so frustrating. let's head to the bond pits. rick santelli. rick? >> thank you, jim. a lot of volatility for a lot of reasons whether it was mr. draghi's boy scout promise in terms of what he's going to do for the euro. it's not about the euro, is it? it's about insolvent countries that happen to be sharing the euro. nonetheless, volatility extended everywhere and it didn't correlate time wise. we had a big resignation. that was hours before the next chart. take a look at the joy of electronic trading. this is a chart of yen futures a little bit before 8:30 eastern. how's that for a little

volatility. next up we have our tenure. you can clearly see the news around 5:00 in the morning by mr. draghi indeed moved rates higher. what is interesting is you see the high yield on that chart? happens to coordinate with the release of initial jobless claims which dropped rather dramatically and some aspects of durable goods that were good. the headline certainly was a good number. if you look at the boom, it sold off more. the pattern's the same. it was up around 132, closed at 126. up double the amount of basis points as us. for the same reason you can see the exact same pattern. now let's move to the euro. this is the battlefield. remember, mario draghi's comments came at a time where there were a lot of huge positions in the marketplace, most of them short. so whether it was the securities side or the currency side, you can see what happens when you throw a match in a hot tinder -- or a dry tinder box and it definitely went up. today's lead story about the

chinese wan versus the dollar, lead story in the journal tee talked about it yesterday, the chart speaks for itself. look at the dollar versus the chinese currency. everything changed since may. if you think this will get more interesting, it will. think about exports of u.s. grains and how that will play ultimately into the chinese picture that you see on their currency in front of you. jim, back to you. >> fantastic. yes. fxe, euro battlefield. let's check out the latest news in energy. let's go to sharon. >> jim, central bank has more information that they released today from draghi. some traders are calling the central bank -- gold prices are at a three-week high. without the specifics on monetary funds -- >> sharon, i'm afraid we had a very hard time hearing you. we'll get back to her shortly. >> it is interesting to see the

interest rate on gold and how it has fallen from what we saw on the back of the draghi comments. that's worth noting here. again, even on this, may not be able to hold its gains. what is on my screen, jim, is kcg. night capital. the stock is down by not too much today. it's more important of the the broader move in the stocks since the facebook ipo has been troubled. it is approaching its 52 week low of 992. 7 cents away. that's an interesting one to watch here. >> individuals. >> yeah. >> individuals just not in this market. a lot of short squeezes today. that's institutional. equinix. 17 points. >> ceo, raymond james, we'll talk to him. you want to talk a good news story this morning, how about sprint? let's watch mr. cramer. take a look at some of these charts i have for you. this is a company really not that long ago bankruptcy was one of the words that was used when people were describing the future for sprint. now that was never a strong possibility but was it remote? absolutely not.

a company with $21 billion in debt, but i think when you look back and you see what this quarter -- the company's been able to do this quarter, you have to remove any and all such talk. for example, the company actually generated free cash. that's right. cash after paying all its interest and everything else. post paid average revenue per user up 7% versus a year ago. churn down to 1.69%. adjusted. that's operating income before depreciation. their forecast, 4.5 billion. let me put that into some perspective. they were looking at 3.7 billion and 3.9 billion. so that gets increased sharply and, again, they did generate $200 million from free cash flow. take a look at post paid churn, take a look at the way they have been moving for sprint over the last few quarters and you get a sense as to real progress at this company. of course it was born from one of the worst mergers of all

time. aol time warner, bank america, countrywide, sprint nextel. they destroyed more value. dan has to come in there. people had their doubts. likes to be the spokesman. walking around central park doing those ads. i don't know what that's all about. >> i like those ads. >> the recapture rate as they close down the old network at nextel is fairly high. 60% of those customers that are being pushed off that network are coming back to sprint. that's an important component. finally, we did have iphone activations for you to put that into perspective. at&t and verizon are still the giants. at least sprint has a fighting chance. >> i'm shocked they have that much recapture from nextel. those people tend to be set free. i also want to say that there is just a remarkable increase in the amount of money people are paying each month. the revenue increase when you have those smart cell phones. >> they have an unlimited data plan, sprint. that is different than verizon

and at&t. >> right. >> that may be appealing to some customers out there. >> sure. >> you know, perhaps it's a differentiation that is proving to be quite positive for the company. >> the most asked about stock that made money. >> really? >> yes. the most called on and what's terrific is there are so few stories. they have almost all continued to go down. we have lucid, sirius satellite. a triumph for the investor who may want to say, it's not all about that. >> coming up, more on this morning's rally, plus what mcdonald's new ceo is saying about the challenges facing the fast food giant. take a look at this morning's early movers. lots of bright spots on this early morning rally thursday.

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the dow, all in the green. no surprise. dow jones industrial average at 1.6% today. that's 209 points. one of the big contributors to the dow today, ibm. up $3. 1.6%. >> that quarter was okay. i come back and say that if angela merkel says anything bad, everything you see on your screen turns to red. it's that bad. >> yes. >> there's two angela's. i fear angela merkel. it's an angela market. >> got it. >> with one day to go before the olympics, carl caught up with mcdonald's new ceo don thompson in london. he took over the top job at the end of june you may recall. mcdonald's is coming off a rare earnings miss in light of ceo marissa meyer of yahoo and jcpenney's taking the reins of

their company. carl asked mcdonald's if he thinks he's been dealt a tough hand? >> we happen to be in a tougher global economic environment, but historically we've done well in those environments so we'll continue to leverage the experience we've had with the singular leadership team around the world and we'll move forward. so am i inheriting a tougher business, if you would? nah, it's just mcdonald's and it's the consumer business. it's the restaurant business. so we'll continue to execute the strategies we have and listen to customers and that will help us to migrate through these times. >> we should note that nbc's full coverage of the olympics begins tomorrow. carl will be there from the olympic village to bring you all of the latest developments. >> lots of people in the food industry, i speak to a lot of people in the restaurant business were just dazed by mcdonald's missing the quarter.

the rap was you mean to tell me that the value meal does not represent the value that people will buy? and this sent shutters. sally smith on "mad money", buffalo wild wings, she said july is doing much better. people should recognize that that stock is down 7. only up a little bit. >> chicken costs? >> no, but they're talking about a potential peak in chicken. things are not out of control. >> walter rob is who? >> the co-ceo of whole foods. pa panera was rocked by mcdonald's. i say my faith is in that gentleman and i think they're going to come back. >> stay tuned. 6 in 60 and much more squawk on the streets ahead.

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all right. time now 6 in 60. tractor supply, is this the king? >> it's not just because of the boots and the gloves and the overalls i bought there. it is because the stock had gotten the expectations so low, monster jpmorgan up. >> altria. >> it's one of the victory laps. i made 20%. dow, stick with mo except if

you're my kids. >> yeah, exactly. terex. >> this is remarkable. this is a company, this is cranes, platforms. it's monster, that's why i'm not going to give up on caterpillar. united rentals is the derivative. >> hsy hershey. >> they are great. >> chef space has been consolidated. kimberly-cla kimberly-clark. >> falk, fantastic ceo. big buy back. >> and sell -- >> bob bughen, best in shown. they go much higher. >> this is really bad. >> will you stop? you're talking about -- this is a fiscal cliff everyone is so worried about. >> what have we got on "mad money"? >> govidian up $3. michael ward, has everyone got the pulse of cole and ag better than michael cole. >> i can't believe he's still there.

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and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz. welcome back to "squawk on

the street." i'm diane in olich. breaking news from the national association of realtors. the sales index fell 1.4% in june. that's another disappoint. we were expecting a small gain. this number is based on contracts signed, not closings. the index still up 9.5% year over year. the realtors are saying buyer interest remains high but fewer home listings mean fewer contract signing opportunities. they are urging the banks in this report to put more distressed properties out on the market. this as banks are trying to modify more loans under the recent so-called robo signing agreement. the index fell 7.6% in the northeast. fell 0.4% in the midwest. fell 2% in the south. it is only up in the west up 2.6%. the realtors say buyer traffic is there but seller traffic is not. that is not enough sellers out there putting their homes out. again, this is the third disappointment this month in sales. we saw existing home sales drop 5.4%. new home sales down 8.4%.

again, the realtors saying there's not enough supply but this is another disappoint. back to you guys. thank you very much, diana. let's get to the roadmap for the next hour. "squawk on the street." call it the central bank put. mario draghi getting a 200 plus point rally. we'll sort through all the big moves. much more next. >> despite the bull based rally, zynga clearly missing the party as shares plunge over 40% on the company's second quarter results. so has the social media bubble popped? what does it mean for facebook? >> raymond james ceo. we'll get his thoughts on sandy weill's thoughts. >> we're up 116 points on the dow. it's all about the president of the european central bank. listen to what mario draghi said this morning in london. >> within our mandate the ecb is

ready to do whatever it takes to preserve the euro. and, believe me, it will be enough. >> it will be enough. it will be enough. steve leesman, this is what the federal reserve can't do with its transparency. the guy is like an old school central banker. he tells the market it will be okay and, sure enough, he ignites confidence. >> yeah, but, simon, even in old school and new school central banking you have to follow up your words with deeds, and i think right now with this 200 point rally, 200 plus point rally -- by the way, when we came in this morning at 6:00 a.m., futures were down 20 points. we not only reversed it from negative to positive, but a strong positive on top of that. if he doesn't follow through, simon, i would suggest right now there are pretty high expectations. i want to explain one of the things that some of the commentators are really focusing in on.

he said when you have this wide differential essentially in sovereign rates. i'm looking at the german ten year being 132. i'm trying to find here a quote on the spanish ten year which was above 7 but it did come down this morning. now 699. okay. that kind of massive differential. he says we can't do our mandate, which is price stability in the entire eurozone, so it's within our mandate to act in regard to these differences in the sovereign rate. that says to people buying sovereign bonds and maybe even additional liquidity in the market in different places, simon. so i hear what you're saying. i don't disagree with what you're saying, but certainly the expectation is out there now for the ecb to act. a lot of people say he gets it now and there could be some sort of massive or large-scale european central bank action in the wake of those comments by draghi, simon. >> you also get the point that i'm making, that the ecb has not followed the feds and its huge

outpouring of transparency, wearing its heart on its sleeve. they don't know if this can happen or that's going to happen. it's old school central banking, what you say to the market, i will make it okay. and the market for the moment believes that. that's a very different proposition from the fed, isn't it? >> you know, simon, i'm not sure i understand the distinction here. bernanke when he has been ready to act has not been necessarily shy about forecasting that to the market. where i think people have thought there's been a short coming, it's an action by the european central bank. i find it interesting, and maybe a little perplexi perplexing, that the market is willing to take draghi at his word here because there have been so many disappointments. would you as an investor take a flyer on draghi's words here? >> at what point, at what point has draghi not followed through on his promise? >> you know, i think that's right, but it's never been enough, that's been the problem,

right? he's followed through. he did the old tros. he did two of those. it was a trillion dollars worth of liquidity. it's not been sufficient. >> i would agree with you. i'm sorry. i would agree with you, but i think the bid higher is covering the unwillingness to be sure the market before perhaps another ltr hits the market when we will see that market move higher. >> let's not forget that rally we saw, guys, in december as a result of that ltro. they want to make sure they get ahead of that. >> i want to provide a little bit of a commentary melissa. it's not an ltro. what they're thinking to get to what simon was thinking is to get to a quantitative easing. it doesn't have a time limit. it would be direct increase of the money supply first. so that's an animal of a different stripe there if they were to actually do qe. maybe it's another ltro,

melissa, we can't discount that idea, but the language today was seen as being of a different order. and i know you have mark grant coming up. he's one of the few guys that is yawning at this. to quote from crosby, stills, nash, young, we've all been here before. he quoted tershay a year ago, i will do what it takes. it's never been enough. >> the main point you're making, i hope we have donovan in the program from ubs in lop done in 1/2 hour. he says they will not act this summer. >> that's going to be a big disappointment. >> they will act in september. >> that will be disappointings. >> high spanish yields don't matter because spain isn't raising money through august. they've canceled that exercise. >> maybe september is not that much worse than august. you said september not december, right? >> yeah. but they have a meeting next week. expectations may be overly high for what they do next week. we have to leave it there. we'll come back to you.

>> one quick point. angela merkel began herve case today, summer vacation. >> how long is it, three-week vacation? >> the timing may be completely coincidence, but if you're mario draghi, you're aware of that, she's somewhere where she can't say something. >> really? she's on vacation. >> when the president goes on holiday he doesn't have the nuclear devices next to him. what a silly thing to say. of course they're in total contact. >> thanks. at least she doesn't have nuclear devices. >> that's true, they don't. >> no. >> anyway. >> probably a good thing. >> let's go back to the earnings. >> yes. exxon mobil reporting q2 profit. a bit of a messy quarter to say the least here. caan, the senior analyst he rates exxon. it has a $97 price target. great to have you with us. pretty messy quarter forex on. it seems to be a little bit of a departure from the way the

company has reported in the past. all in all, how do you assess the quarter? >> basically when you strip out all these asset sale gains you're looking at about $2.11 which is a clean beat versus a contentious and versus our estimate 259 bucks. a lot of that being driven by some of the upstream projects that came on line in the quarter. some strong liquids production out of west africa and also probably a lower tax rate. >> so at this point, faisel, within this universe of integrated stocks, which one is your favorite? we have results out from conico. they weren't very good as the company tries to transition. we saw the stocks suffer. where do you stand on your topic? >> yeah, our topics are in the refining sector. we ever' in refining for a number of different reasons, the first being that the u.s. has become a net exporter of refined product and we're sending out a tremendous amount of exports, both latin america, europe, other parts of the world. these refineries are dividending

back a great amount of cash flow in dividends, share repurchases. that's where we're putting our incremental recommendations. >> on exxon itself, where do you actually stand on the stock there? it's barely moved yet today. it's baurlly moved over the 12-month period. it's down 7% over the last five years. still you have a company that's investing $37 billion now to increase its capacity by a million barrels a day. is that a good tradeoff in your view? is it a long-term hold? >> this is a long-term stock for us. they are one of the most disciplined companies in the energy sector. the cash flow they generate is tremendous. you're looking at 2.7% dividend yield in a company buying back $20 billion of its stock over the next 12 months. it's very difficult to find that sort of cash flow yield and that sort of return of cash flow to shareholders over a long period of time. >> and what about those that were points to its acquisition of xto energy.

$35 billion. its exposure to natural gas, largest natural gas producer. some would say that's a drag on this business that is not evident in others and therefore it falls much lower down the pecking order in terms of buying interest or should. >> i think that's a fair statement, no doubt about it. natural gas prices are at low levels. that's impacting profitability of their u.s. gas producing assets. but on the flip side the chemicals business has benefitted from low natural gas prices. in this sort of situation with their portfolio of assets they benefit from being integrated. if gas prices were higher, that would hurt them on the chemical side and a little bit on the refining side. in this situation it helps them. >> faisel, good to see you. thanks for the advice. >> sure. >> let's get a check on shares of zynga. hold your breath. after they posted second quarter results that badly missed estimates, slashed 2012 earnings, the stock is down 40%.

that's right, 40% loss on the market value of this gaming company. evan wilson, an analyst at pacific west securities, the first question is is there anything good? is there anything to build a case from $3 that says this thing can recover? >> no. well, yes. i think zing -- >> no. well, yes. your first answer was no. >> exactly. we have not been positive on this name. i was going to say that the thing they have is cash. they still have cash left over. it's a billion six. they can acquire developers, assets. there's more new games coming from zynga. the problem, the traditional games, the games you know and may not love like the farmvilles, cityvilles, they're declining. the hits aren't big enough to replace them. it's not clear that they have any hits in the portfolio that allow them to grow into the future. this is a no growth company.

>> it has a declining ebidta, it's been eight months? >> december. >> i find this hard to imagine. it doesn't seem that this company should have gone public if you're correct in your assessments. >> yeah. it's a very difficult time for them. i think we have to use history as a guide on this one. we've seen several online game companies get public on one or two games and then after those games start to decline they show that it's very tough to create hits. they don't do that. so if that history continues to serve as a guide, i think what we'll see is zynga will start to spend that cash and they'll try to find a hit. if you're buying it saying it's cheap, net the cash, that cash balance and that operating cash flow might go negative and might be a value trap. >> when will it go negative, evan? how much time do they have, in the second quarter they posted development costs up 79%. it seems like this company has an upward climb in terms of the

search for the next new game, whether it be the increase in cost to develop them ihouse or the costs to go out and acquire a developer? >> that's a good point. i think this year they'll probably generate a little bit of cash. i think next year is the first year that on an operating cash flow basis it will start to be a drag. more importantly, they'll probably go out and start acquiring more assets. when you start to chip away at 1.6 billion, 100 million here, 100 million there. we've seen them pay 100 million for omg pop. that's when you start to see it turn into a value trap and the value goes down. >> we know 11% of facebook's revenue came from zynga. facebook is down 7% i suspect partly on what we've seen here with the results overnight. at the same time, zynga is importantly saying that one of the reasons it's not done so well is because facebook changed the way in which it operates so that other game makers were favored and put up there with zynga. so i understand the negative read through automatically to facebook, but is this not also

an indication potentially that facebook, a, has huge power in the marketplace and secondly is diversifying? >> i think that's true. but, you know, i think really what zynga said is that facebook is incentive advising people to going from new games to old games. that's going from high paying games to low paying games. it's not just zynga. if they do that they are taking away the whole payments revenue. zynga is the biggest part of facebook's revenue. facebook grew over 50%. clearly that growth rate is too high. at least for that part of the business, that's a small minority, that has to come down. for facebook this is another thing that is giving people pause around the stock in general. you know, there is a lot of concern around europe. we've already seen the deceleration there. the transition from desktop to mobile also hurts their ability to mon advertise and now when you have a situation with the payments line, these things are adding up and adding a lot mother net questions for

facebook for total into tonight. >> we may get some of those questions answered after the bell, evan. thank you. >> thank you. >> shares of raymond james are down 1.7%. this after missing eps estimates. coming up next, see what paul riley has to say about the numbers and yesterday's big call to break up the banks. back in two. i'm freaking out man. why? i thought jill was your soul mate. no, no it's her dad.

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welcome back to "squawk on the street." we're taking a look after the bell yesterday reporting better than estimated earnings. total sales up 14%. the ceo on a conference call who is saying they see no evidence in a slow down of consumer spending. whole foods does appeal to a higher customer. stock up 9.1% on news the company is raising its full year guide dance. david, over to you. >> raymond james financial reporting third quarter earnings of $76.4 million with profit up 63%. they had an adjusted 64%. shares of raymond james you can see down about 2.7, 2.8% this morning. joining us in the first on cnbc interview, paul riley. mr. riley, nice to have you.

you know, you say in your press release, i believe, that most respects june quarter establishes a baseline for future comparisons. that's because, of course, the acquisition of morgan keegan hasn't been completed. there's a lot of messy comparisons, if you will. if june establishes that baseline, what are you looking for, let's say, a year from now in terms of the growth of your company. >> it's funny, david. the street maybe got ahead of us. we were very clear in our guidance of morgan keegan that we wouldn't be a creed of this year. revenue was higher than people thought and we have told people that our goal is to retain producers, keep a high service environment and that we weren't going to get the cost savings until next year. i think we showed that's what we're doing. the result has been we've had high retention, higher than people have expected, higher revenue, but the cost savings aren't here because we're not taking out the back office costs until after the full integration next calendar year.

>> right. what about the idea though in terms of growth at this point. many people would say that interest in the equity markets, for example, is quite low. what are you seeing from your clients? i know assets were down a bit. of course that in part because the s&p was down, but what are you hearing on the ground from those people that work for raymond james trying to gather assets? >> it's kind of hard for an individual investor today to be positive with all the news they hear on europe with what we went through with facebook, with looking at all the negative ads for the election, budget deficits. you know, so investor sentiment is down in terms of positive outlook. they've stuck pretty well with their portfolios. they're being cautious. >> speaking about those investors, your private client business was actually a bright spot. wells fargo characterized your new asset growth as strong, strong new net asset growth in private clients. you mentioned there hasn't been

a flight away from equities at the same time in terms of the new assets coming under management, are they going to fixed income, going to the safer places in the market? >> i think there's already been a move, melissa, to the mixed income and cash. people are much more liquid than they were a few years ago. so we haven't cena digs nal movement. actually, the individual investor is in a conundrum. you're afraid of rates going up, bonds coming down, you're squared of the equity market. what we tell people is just to stay allocated. listen to their financial advisors based on their need. stay in a balanced approach and don't panic. i think that's what we're seeing so far from our clients. >> mr. riley, for decades the united states stood out for its very strong equity culture. people in the street invested in the stock market. that's what they did to a greater extent than anywhere else on planet earth. is that equity culture broken in america now? >> simon, it's a great question. i don't know if you'd say it's

broken. my daughter who is in her mid 20s hasn't seen in her adulthood a positive equity market so, you know, i grew up in an era that people invested in equities and long term you made money. i think that value is still there in the long term but certainly the last decade hasn't brought this next generation with a positive outlook and they're going to have to overcome it. when the equity markets recover, i think they will, we'll get through this global restructuring of balance sheets of governments, i think it will do well and people will come back in. >> you know, you increased your scale and capital markets with the acquisition of morgan keegan. some would say why get bigger in capital markets depending on how weak they are. why not more of a pure play in terms of asset management, wealth management? >> well, you know, the combination itself was driven off of the wealth management business and fixed income businesses which were both positives for us. the public finance business was very, very strong at morgan

keegan. they were a big upgrade to our fixed income who had a reasonable quarter. the wealth management business, they were the bulk of the business. the equity capital markets business was very small. we couldn't choose what to buy and not to buy. it all came over and most of the layoffs really came off of that division as there was a lot of overlap. so the combination was driven by the wealth management and fixed income businesses. >> mr. riley, we'll leave it there. appreciate your time. >> thank you guys. >> you're welcome. paul riley from raymond james. ahead, the kingdom of zuckerberg. facebook will post its first earnings tonight as a publicly traded company. as analysts warn of a major slowdown of web usage, is facebook on the verge of a big miss or are you set up to make some "fast money" tonight in the wake of zynga? ♪ american woman, momma, let me be ♪ their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac

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to experience the ultimate expression of power -- control. ♪ during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit of perfection. the euro making a sharp move higher this morning. up by about 1.25%. mario draghi said he would do

whatever it takes to preserve the euro. let's bring in andy bush of bmo capital markets. how are you interpreting the comments and where the euro is? >> well, thank goodness the euro crisis is over, right? super mario to the rescue. >> wow. >> it's a little over exuberant as far as i'm concerned. comments are interesting but action is what we need to see. the early leaks said they were loosening capital that they would take for repos at the ecb. now we have these comments very forcefully saying he will do whatever is necessary to make sure the euro survives. you know, he has to. otherwise he doesn't have a job. i would say the market's a little too excited about this right now. basically i want to sell this thing if we rally a little bit more from these levels. >> andy, you know that i respect you hugely, but the concern in the market was that actually the ecb would not buy spanish and italian debt, that they've moved away from that. that was the sort of noises that they were making.

it now looks like smp, that program could be back on the co cogs. that is potentially a game changer depending on the volume of the buying that they're prepared to embark upon. >> i think you're a little ahead of it, simon, in the sense of game change. >> okay. >> i think you're right that the comments are fascinating because the ecb has been dragging their feet. they haven't done s&p in god knows when, that's why spanish bond yields went over 7.5%. the fact is though that they're going to have to do a lot besides just s&p. this isn't the overall solution, this is treating a symptom of the crisis. the political solution is not there yet. we're probably going to get greece to pull out of the eurozone within six months. i just think that we're not quite done with this and overall europe still needs a weak euro to help with growth. >> okay. in terms of the opportunity here, and bey, you want to sell euros, but you want to wait for the euro to go a little bit higher against the dollar? >> right.

clearly the market is caught short. i love this kind of environment because we'll see how far this gets out of control. i want to sell up around 1.2410. take profit about 300 points. we've got a great number on friday with gdp to trade off of. if the number comes in better than expected, anything at 1.5% or better, that means there shouldn't be any fed qe next week. we should see the dollar rally on that. so that's bad for the euro. i continue to want to sell euros on rallies. >> all right. andy, good to see you. i'll see you friday. andy bush of bmo. friday is "money motion" currency trading. 5:30 p.m. >> it's that time of the day. let's get some breaking news from sharon. >> a rally underway in the natural gas market after the energy department reports that natural gas storage levels increased by 26 billion cubic feet in the past week. now that increase is right in line with expectations, but it

is still considerably less than what we normally see for this time of year. last year we saw an addition of about 48 bcf. the five-year average is 61. so we're still within that trend of seeing smaller builds than historical averages. we are looking at natural gas prices that rallied to above $3.10 here but have come off of the highs of the session. we're still looking at that key resistance level being around $3.20. in addition to the smaller builds that we're seeing, the fact that we're seeing above normal temperature forecasts for the next six to ten days, that is in support of prices. the fact that rig counts are falling as well, that is something else that traders say let you know that perhaps producers are cutting back on production here. that is something that could be supportive of prices longer term. back to you. all right. thanks very much, sharon epperson. imac sent shares rallying for a while. that's no longer the case.

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of trading. up 213 on the dow.

joining us is the director of floor trading. art, what do you make of the rally. are you skeptical? >> a little bit. it's primarily driven by an enormous bout of short coming in the euro. rather spectacular move but everybody in his brother was short the euro. this caught them off base. we've produced in the first half hour, the volume was about 25 to 30% higher than it's been recently. we'll see if that holds through the day. and after all is said and done, it's a terrific move, but we're about where we were three days ago. we've run into some resistance in the s&p at 1359, 1363. >> so far we've gotten data points from earnings. commentary from the likes of andrew livrus at dow chemical. whatever the ecb does at this point, could it actually help lift third quarter? we've heard from bob that going into the earnings season the

essence for growth at 6% in the third quarter. they've come down to zero. can we reverse that? >> i don't think you can fully reverse it. you might be able to improve it slightly. this is like turning a big aircraft carrier around. it's going to take a little bit. while europe has a heavy influence, it's not all europe. >> how dangerous are the gdp revisions tomorrow for refocusing us on the u.s. economy and perhaps we may not have grown as fast as we thought and therefore the future might not be as bright at the margin. >> the expectations are obviously to move them lower. if you start to get a rash at the bottom end that slips below 1%, that will really be critical. we'll start to see big problems there, i think. >> is this just a lot of investors who remember last december's violent rally after the ltro and want to get out of the way in terms of covering shorts or is there more to it? >> well, there may be more to it because they believe that he realizes he probably doesn't want to do an ltro all over

again. it actually worsened things. the spanish banks took the money and bought more spanish debt. he has to find a different way to approach this. what's interesting is that you had first nowapny giving them home and draghi heavily today. we haven't heard back from the merkels yet. people want to get their latest edition of speegle and see what they say. >> at the end of the day it comes back to angela at the end of the day. >> absolutely. >> even when she's on vacation. >> stage by stage, at least you get cover fire from the ecb. at least they might come in and buy the spanish and italian bonds. that is significant in seeing us through potentially a culture of trade, isn't it? >> it certainly would be. it would appear to be at some variance with the treaty that set it up. they're not supposed to go in directly to sovereign debt. he implied very clearly in his speech that he thought it was within his mandate, but he's going to have to walk a real tight rope to demonstrate how it

is. >> how do you think we close? >> i think you give some of it back. i'm impressed with the dow hanging the way it is. i think you probably give back close to half of it. >> half of it? >> yeah. okay. >> art. thank you. >> we're up now 183 on the dow. if you just tuned in, good morning. we've had an important comment from the head of the ecb overnight, mario draghi, indicating that the bank does stand by to intervene into what is happening in europe. listen to what the man said. >> within our mandate the ecb is ready to do whatever it takes to preserve the euro. and, believe me, it will be enough. >> joining us now from london is paul donovan, senior international economist with ebs. we've got an ecb meeting next week. do you think they'll act? >> next week might be a little bit soon. we've got a press conference

where they will look at expectations but the urgency of acting at the august meeting is not necessarily there. largely because spain doesn't have a great deal of funding to do in august. in fact, spain has canceled an auction in august because it thinks it can get away from doing it. i would be more inclined to look at september action. >> what do you expect them to do, cut rates and buy spanish bonds? anything more? another ltro? >> certainly cut rates. i think that much is clear and in the market. if they don't cut rates, there will be considerable upset. i think they cut the refinance rate. they probably do not cut the discount rate to zero. apart from anything else, they can't do very much. you don't want to demonstrate your impotence to the world. certainly i think an smp is very likely. we've always felt that in order to keep the markets calm. an ltro, yes, but not now. the purpose of an ltro is not to

bail out bond markets, the purpose of an ltro is to fund banks. they will need funding this year and an ltro will be offered. they will have to broaden the worrying of collateral around them. >> i'm curious as to your response of the language used by mr. draghi which is very muscular. the idea of whatever it takes. tell me, has that ever come you the o of a banker before of this type in europe, the ecb's central banker? >> well, technically it comes out of every central banker all the time. all central bankers have the mandate to do whatever is necessary to preserve the integrity of the financial system. that's the fed's responsibility, ecb's responsibility, bank of england's responsibility. so in that sense it's sort of a statement to central bank principles 101. it's worth noting of course that mr. draghi did caveat that within the mandate. that, of course, i think is one of the critical issues. how far politically is he going

to be able to go? >> paul, citigroup has got a lot of attention this morning for its assumptional forecast depending how you split the hairs. greece will leave the eurozone shortly. 90% probability is what they're saying. are they right? >> well, i would never like to criticize one of my peers in the market but, no, they're absolutely wrong. >> why? >> if greece leaves the euro, spain, portugal will leave within a matter of weeks. it is impossible for one country to leave the eurozone. if you make an irrevocable monetary union revocable, immediately you will get bank runs across the weaker countries of the eurozone. any country that has taken the bailout will be subject to that and you will see the collapse of the euro. everyone is going to work very hard to keep this thing together. >> so in essence everybody else is going to start writing blank checks to greece? they're going to be allowed to rene renege? >> not necessarily.

greece can default but stay in the euro. of course they've already equalled it once inside the euro. they're getting used to it. at some point they'll default again. in the interim i think the greeks will have to be bailed out again. >> paul, it's great to have you on u.s. output. thank you very much. the view from paul donovan in lon done. midwest seeing its worst drought in over 50 years. there's a bipartisan effort to urge leaders to bring the farm bill to a vote on the floor. we have the congressman who is leading that initiative coming up next. it's just another way you'll be traveling at the speed of hertz. you want to save money on car insurance? no problem. you want to save money on rv insurance?

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but a 3 year low. 3126 after the company reported weaker than expected second quarter results. 78 cents a share. missing estimates by 13 cents a share. also forecasting higher production costs for the rest of the year and undertaking a review of all of its operations the ceo says it's looking at its mines and productions to make sure all of them can generate decent free cash flow and strong returns, that they don't meet the criteria the company is setting down, the company says they will be shelled or divested. there you see, gold off 7.5%. back to you. >> mary thompson, thank you very much. there is a bipartisan effort among members of congress urging house leaders to bring the farm bill to a floor vote before congress departs for a five week august recess. the bill includes disaster assistance to farmers struggling. democratic senator peter welch from vermont is leading the farm

bill. great to have you with us. >> thank you. >> to the average person they see corn price, bean prices, etc., reach record highs. they're wondering how are farmers suffering. >> well, they're suffering very much. there's really two issues here. one is the drought, and that is severe and brutal. the farm bill would be helpful. there is disaster assistance that would be available. but the second is that we need a farm bill for a five-year plan that would finally start reforming this direct payment system where we've been sending money to people for doing nothing. the senate passed a bill that got rid of those direct payments. the house agriculture committee on a very strong bipartisan vote passed a bill to get rid of those payments and now what's happening in congress is we're using politically the drought as an excuse not to pass a farm bill. that's wrong. we should bring this farm bill to the floor. we should vote on it and we should -- we should let people bring in their amendments and act on it. >> congressman, it's also in many people's view a deeply flawed bill. on the one hand you've got $16

billion in cuts to nutrition and conservation programs. some chefs have been writing letters, high profile chefs writing letters about that. you have $36 billion on new farm subsidies without reform of the federal crop insurance program, which is a huge issue for many people. isn't the danger that you use this crisis to push through bad legislation? >> well, actually, that is a danger. the two points that you made are totally valid points, and the bill is flawed. but the process has to work. there is improvements in the farm bill in that we've reduced the payments, but there are many who argue and actually i agree that we could reduce them more. there are many who argue that the food stamp cuts are way too high. i actually agree with that. but my position is this, america needs a farm bill. congress has to act. we should bring this to the floor and let both sides present their amendments and we may end up saving food stamps and we may end up providing more savings. then go into conference with the senate. but to do nothing is an

unacceptable option and it seems to be the preferred option for congress. we've got a job to do. the fact that it's a hard job is not an excuse to not do it. >> yeah, but it might help if you separated out the two processes. so you hammered out a better bill because you agree it's not a great bill. in the meantime, you have some form of emergency relief for the drought stricken areas as i think might be suggested in bein's office. >> i don't think that's what's being suggested. if it were, that would be a reasonable approach. basically i think what's happening is that there is an inability on the republican side, mr. boehner's office, to get this bill to the floor. they don't know that they can pass it. they have a lot of division within their own caucus. then the drought becomes an alternative. do something on the drought, extend the current bill for a year. incidentally, the current bill would extend and continue these direct payments to everybody on both sides of the aisle knows have to be ended. literally doing nothing means that we maintain a very bad

status quo. that's not a good option. >> all right. congressman, we're going to leave it there. thanks for your time. we do appreciate it. congressman it. still to come we have an exclusive interview with imax ceo richard gelfond on the company's earnings report. rick santelli working on the next hour of "squawk on the street" and some gems, rick, up your sleeve. >> it's an anniversary of dodd-frank so i think we need to talk about some things. i remember and i pulled out a quote then press secretary robert gibbs when asked about the gse and what was going to happen "obviously part of the financial regulatory reform. gse reform is going to be part of that. well, you know, here we go, we swept that one right under the rug, didn't we? there's a lot of things about dodd-frank that all revolved around gse reform, of course, i have a shovel, i'm going to dig some of it up all at the top of the hour. [ male announcer ] it's a golden opportunity...

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the dow chemical down about 4%, this after the company's quarterly results missed expectations. earlier on "squawk box," ceo andrew liveris expressed

pessimism will europe. >> i'd call the euro in a recession clearly and i'd say china got hit by that during the quarter. >> of course that's something we've discussed a lot here in terms of the slowdown in china being directly connected to europe, and we've seen so many of our own multinational companies that are reporting earnings, particularly that are not good. the outlook not good given europe. draghi can talk all he wants but the fact is most of europe is in recession. >> the dow is over 18% over the last 12 months. you can see that coming. obviously it's important what the man says but in a sense it's backward looking if you're trying to factor in what will happen as the market should over the next 12 or 18 months. that's why i think draghi is important. >> he talked about a slowdown in their business here and overall as a result of concerns about europe that has taken place in a relatively near term. >> what is also stunning about his comments specifically was that when the company reported

the second quarter they said they saw momentum in the second quarter and they expected that to continue in the second half of the year so this is a dramatic very versal. >> isn't that also where we were with the u.s. growth? we had great employment figures coming out of the first quarter on the basis of the weather and the fact it had been so good and the pullback in the second quarter and everyone downgraded their view of the u.s. economy, fitting totally with that, doesn't it? >> it does. >> we have had a bit of a pullback in the s&p, up about 1.25%. we'd been up as much as 1.6%, 1.7% on the session i believe. simon to the point of our guests earlier, some are saying in some ways draghi is not saying anything that hasn't been said before. the img come out with a statement saying they support those statements which he said in the past as well. i don't know if that's playing out in the market making people feel a little less secure. >> the easiest thing is to sit

there and say the eurozone is going to hell, it's going to break up, it's going to be a very bad situation and anything that you hear discounting it and saying it's still going to break up, i think it's important to listen to what people say. if you're going to make money in the market, you've gotta take a risk. he's saying something very important and the market is reacting to that. i think, potentially could you look back, david, look at, i remember when the ltro -- hang on -- when the ltro was first announced i broke into the 9:00 hour on this program and there was a small move in the dow. nobody understood what the implications of that first tranche of three-year money was going to be and there was a huge rally through the first quarter. >> an spanish yields have never been higher than this week but it had nothing in terms of stemming the continuation of this crisis. it did nothing. >> at this point there is an understanding of what an ltro move would be, and so the impact in the markets gets smaller.

>> i agree. i just don't owe know those two events are connected. >> i disagree the ltro had no effect. it propped up a number of very weak banks. we have not had bank implosions in europe because of free money for three years. >> the eminent collapse of the banking sector. >> that was crucial. >> that is true. speeding up of the crisis in terms of looking back saying it was a significant milestone in setting the crisis in a different way or reversing it, i would say that's not the case. >> let's not underestimate there is structural reform going in for example spain. behind the headlines they are making huge efforts. they're not going to hit 3% of gdp target as fast as we thought. the united states is running a 7% of gdp deficit. it just doesn't have the time to do that. europe is making huge inroads, without greece. greece is the exception. >> greece is -- >> okay, we'll have final thoughts on the big rally on the

street after the break, thursday morning on cnbc, up 172 points on the dow. +g#a#a#a#a#a'9#a+=#a#a#a#a#a#a

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"squawk on the street." here's what's happening so far. >> i thought it was weird for sandy to say well congress should go do it or the administration should be the ones to go break up the companies because why are they together if there's no synergy from that? >> on jobless claims we see a drop from a revised 388 down to 353. >> the idea of having necessarily breaking up the institutions is going to solve the problem i think that's frankly a too simplistic an approach. should be done maybe in some cases under certain circumstances but that's not the solution to the problem. >> this is the code of, all right, i'm taking this matter in my own hands. the difference is, is that we're one country. >> right. >> if germany says something different about draghi today, it leaks at 2:30 today, this whole rally disappears. remember this is not one country and there's not one federal reserve. exxon is no longer the bellwether. it reminds me of a bank, not of

an oil company, and i wyche real oil companies with real growth and this company doesn't have it. >> there we go off to the races at the big board. >> they're probably going to go out and start acquiring more assets when you chip away at that 1.6 billion with 100 million here, 100 million there, we saw them pay 180 million for omg pop, that's when you see the value and the cash go down. >> good thursday morning. welcome to the third hour of "squawk on the street." let's get a check on the markets. we have a rally on our hands, off the session highs, the dow posting a 178 point gain, up 1.4%, the s&p up 17 or 1.25% and the nasdaq higher by 1.2%. we're seeing the most strength in technology as well as energy stocks. speaking of technology, western digital and seagate, two of the biggest gainers on the s&p. western dig handily beating analyst estimates and aggressively moving higher

estimates for the full year. seagate stock responding with a sharp rise as well. cliffs natural, one of the s&p's biggest losers after the company reported a 37% drop in second quarter profit, fbr capital downgrading the stock to market perform from an outperform today. buckle up, here is the road map. zyga taking a deep plunge into the red and pulling facebook now as well. is it a bad omen for facebook reporting after the close tonight? plus one on one with imax ceo in an exclusive interview after the company's second quarter report today he'll tell us how high ticket prices could change the race at the box office this summer. and we're less than 30 minutes away from the european close, the president of the ecb, mario draghi saying he'll do whatever it takes to save the eurozone. markets overseas spiking on his comments and the yields are falling. the very latest. plus the new ceo of mcdonald's sits down for his first interview since taking over the fast food giant.

find out his plans for the company's future, and whether he's been handed a hospital pass by the outgoing ceo. we start with mario draghi saying "believe me, what i do will be enough to save the euro." for more insight we bring in eric, chief economist with rbc global asset management. good morning to you. >> good morning. >> so are you going to tell clients something different as a result of what draghi has said or is it the same when it comes to europe? >> you know, i won't be, simply because i've always been a bit of an optimist when it comes to europe. it seems to me the market underestimates the political will out there and the policy will out there as well. to me this demonstrates yet again when it comes down to it, the ecb is willing to do a lot, maybe not right now, probably not by next week in my opinion but should push come to shove, yields go to unsustainable levels where they're not n my mind, right now, we would see the ecb acting in a forceable fashion.

it's clear when you look at the political change in europe, southern european countries are continuing on the same path recognizing it's best for everyone if europe sticks together so that political will is reemphasized in my mind and quite strong and suggests that the risk of a breakup is still fairly low in my mind. >> is the conclusion for what you're saying to me now then that if we go through a rough summer, because it could be very rough, because they may not act until later in the fourth quarter, that that is a major buying opportunity, because at the end of the day, from what you're saying, the eurozone will hold together, and there will be no systemic risk? >> i agree that i think there will be no systemic risk in the end. as to whether this will cost buying opportunity that's tough to say. one of the keys here is that market pressure in a perverse sort of way is a good thing. it's pressure that gets politicians moving, moving in the right direction, finally, by the way, moving in a direction that addresses not just the

symptoms, the high debt and yields but equally addressing poor competitiveness, one of the fundamental problems we're seeing pushes there and addresses the fact this eurozone is a broken union. it needs the banking union and here we are credibly talking about a banking union, maybe about a fiscal union. hard to get excited about those things but it's easy to get excited about the implications of those things, which is deposit insurance, which is potentially a euro bond at some point down the line. i think germany has been horribly misinterpreted. they're very much fans of united states and europe. they don't want to put the cart before the horse. it's a matter of operations. if the intent is there, road map is there, markets might calm down and give europeans enough time to pull this off. >> eric you mentioned before you're an optimist and you said there are signs of healing all over the place, look at housing as well as the employment picture. what are you seeing that many other people are not seeing and why do you consider that the risks out there, that are being grappled with by investors such as the fiscal cliff in europe, why do you say they are smaller

risks than we actually think? >> let me qualify my economic forecast are no stronger than consensus, they're actually a little bit less. i think the risks might be less than imagined and the big risk here is we ignore the important but subtle healing going on beneath the surface particularly with respect to the u.s. economy. it's not a secret anymore but housing has arguably bottomed, beginning to creep higher. one of the things fundamentally wrong about the u.s., it's on its way. mortgage credit not being extended eagerly but bank credit is up 6% in the last year, that's the quickest we've seen since the crunch ended, substantially the quickest as well and you go to the job market and again this is maybe not the time to be arguing that jobs are wonderful here, we are experiencing a deceleration in job creation but you dig beneath the surface, layoffs are running at a below normal rate. firms have a bad rap but they're not laying off. they're not fully translating into hiring but getting close to norm and you look for signs of

healing else where, construction and manufacturing, 50% of the job losses happen. they're not a lot but they're coming down closer to the historical norm than the overall unemployment rate not because the jobs are coming back there, because people are defying expectations and shifting sectors and to some extent being reemployed there. this is really just a statement at some point several years down the line we're all going to wake up and most of the u.s. is healed. >> well, eric, you've really cheered me up. thank you very much. >> my pleasure. >> have a great day. >> you were cheery before that, simon. >> i know but he's really cheered me up. >> yes. facebook meantime coming up on a milestone after the bell, its first earnings report as a publicly traded company. should investors be concerned after zynga's second quarter dismal earnings report. we bring in sandy reyes, internet report for the "wall street journal" and kayla tashi and julia boorstin.

girls great to see you all. i think these are the questions most investors have, will zuckerberg be on the call and give company guidance? what is your take according to sources? >> i don't know whether he will be on the call but i can say he should be on the call. everybody i speak to says that it's very important that he get on that call and reassure people that he cares about making long-term wealth for these investors and you know, that was the big problem with the ipo, people felt facebook didn't care about their investors and this is an opportunity for them to get on the phone and say to people we do care, we're in this for the long-term, it may have been a bumpy road in the beginning but we're going to create wealth for you, that's our goal and why we care. >> let's not get ahead of ourselves. they're explicit, not going to profit maximize. let's not pretend this company is anything other than a kingdom with one king, mark zuckerberg. let's not pretend it's something different. >> no, i'm not. what did i say that implied he

was different? >> because he hasn't said he's going to necessarily create long-term wealth for ha shareholders, has he? >> exactly. he needs to get on the phone and say that. you bring up a good point, this is the man that matters. cheryl sandberg can get on the call, david ebersman, the cfo can get on the call but the only person that matters is mark zuckerberg. he certainly should if he cares about his relationship with investors. you're right, i think there is a lot of skepticism how much he cares in the short term. i think in the long-term to some extent he has to be concerned about creating long-term wealth. that's sort of the point of having a company. >> webb bush's michael pactor says if he does not get on the call he should not be ceo since he is the controlling shareholder of the company he has an obligation to do so. the optics have changed as well from that time when that s1 was released and we had that notion the company would not profit

maximize and where the stock is now so i would imagine the pressure is much more on zuckerberg to at least make a token appearance, at least give a monolog at the top of the top of the conference call. >> this is a situation where perception is more important than reality. unfortunately for pacter's case if he's dethroned it's him who would make that decision. investors want to see, zuckerberg top of mind, regardless of whether he leads the call i think they argue the task of creating wealth for shareholders probably lay with cheryl sandberg and david eberesman and i have three things in this chart about what investors care about, monetization and different revenue streams. as we saw with zynga last night, that's a bit of a rocky road so could they monetize bing search, what is the future of r&z another question. they want to see what the future of their revenue streams will look like.

on the r&d spend that's important. one of the big questions on the road show, why is your r&d growing faster than revenue? revenue growth is slowing and david ebersman this is growing and we're hiring more people to combat mobile this will increase as a dollar amount and percentage of revenue and you want to know where that's going, where that money is going and when it will trickle down to your real margins. >> julia, interestingly also to hear what the analysts' reception is and how they press the company. yesterday you were on the zynga conference call, came out with a dismal second quarter report, awful guidance. facebook going into the report has 17 buys, two neutrals. and the analysts on the zynga calls often overlap with facebook they were extremely testy and pressing zynga for answers. >> they were hammering zynga.

one asked the ceo why should we buy this stock? why should anyone buy this stock? analysts op. the facebook call are really going to be pushing for guidance, per your earlier question. the thing with facebook, facebook has made a number of announcements and changes in the past quarter especially in the month of june, facebook ruled out a number of changes making it easier for marketers to buy mobile ads which is a big part of their strategy, also opening the door for developers to sell apps and sell app subscriptions on facebook sites, so facebook has really made it easier for a number of developers to generate more revenue for them. this could be a great new revenue stream for facebook going forward but we won't see the impact of these changes really in a second quarter so i think it's on facebook to explain how all of these changes that they've made should impact revenue going forward, and really give us that outlook. >> gene muenster was on "squawk box" from piper jaffrey, he's

saying given the stock is down 16%, there's a possibility of a real good spike higher and zynga may have artificially lowered expectations and he spoke about the want button that may be launched in september. can you tell us about that and how that might enable facebook to further monetize? >> you know, i think that what julia said is really the key. want button, maybe. commerce on facebook has been questionable, it's something they're working on, but i think that the big things and kayla touched on this is search and ad network, these are the two big monetization possibilities facebook has and when we talk about growth, facebook's growth has obviously been decelerating but we want to see massive growth because this company thinks it's worth $100 billion and right now that's very hard to see how that's going to happen, even with all of these little things they're doing and we've got to see the big things. that may not come for quite a while so we may not start to see

that big, massive growth for another year or two. >> all right, guys we have to leave it there. quickly, julia. >> melissa, i was just going to say if they can say anything about a ad network or want button, selling virtual goods, if they can say they will launch physical sales that could have a positive impact on the stock. >> or if they have 200 million more subscribers, active users. >> thank you so much. full coverage of the conference call, will he be on the call, tune in to "fast money" tonight. gary kominski, what do you think? >> melissa, he was over there in the big studio 27 hours ago. many of you contacted me and i hear what you're saying. take a look at this citigroup chart. this is the chart going back to 1998, obviously you've had the reverse split so a lot of people forget exactly what the performance was.

this period right here, what we're talking about between 2000 and 2010, stock down 90% essentially. remember, this is the time period where sandy weill was out there telling the world with his management team that the financial supermarket model was the future, cross-selling the products the best way to go, returns for shareholders, this was it. during the same time period, i want to just remind people, take a look over here, this is what according to forbes sandy sold in stock and options during that period, cashed out approximately $785 million worth of stock personally, probably why he's smiling in that picture. my point is very simple. i was at those meetings. i know what sandy weill told people. i was on institutional investor there. i know what the belief in the financial supermarket was. when he comes on trf and he talks about his charitable endeavors, which of course we all know are very good things, when he is able to cash out that type of stock in a period where the financial supermarket model, the breakdown of glass-steagall,

something he said at that time was the whole point of the model of the future, and to say now, what do i want to say, what about all the employees, the people that work in the margin department, the people that work in the custody, the private bankers, and in fact, dick beavebeav beavoire, they lost 90% of their wealth because they bought into the financial supermarket model and they hear yesterday maybe this model doesn't work. most of those employees still own a tremendous amount of stock in their retirement plans and so you cannot, you cannot change history, which gets me to another point which i want to talk about. i see a fundamental change here recently and i don't know what is being served in the mojitos, whether they be in nantucket, aspen, in the mediterranean on the yachts but i see a lot of people thinking we're five years out of the beginning of the credit crisis and they think these management teams they can rewrite history. maybe it's the fact that it's

five years and they think we can come back and say all these things that we told you as investors made sense, didn't make sense. well i'll tell you something, simon and melissa, i'm their worst nightmare because the fact i'm here at cnbc and i know where all the bodies are buried, i can promise you, the viewers that i will not let that happen. i will continue to tell these people when they try to rewrite history, you can't do it. back to you. >> stay on it, gary. let's head over to rick santelli at the cme group. >> we didn't talk but we're definitely connected in our material today, gary, but rewriting history, politicians do it in every country. the problem is they can't rewrite us a check in 1998 dollars. lot of failed promises. "miss congeniality" what's their answer to everything, world peace. whether it's regulation of world peace, dismissing those things makes you sound foolish. who wouldn't be for some form of regulation or who wouldn't like, you know, world peace but if world peace meant you had to put a dictator in charge of the world or regulation, you put

clowns in charge of the warehouses, what's the point? okay, let's go back some quotes. he was talking about glass-steagall and mr. weill yesterday. here's something alan greenspan, and listen we all say things we wish we didn't but this is big in the '80s, here's what alan greenspan said "separation of commerce and banking at this stage is simply not helpful." he went on to say "i do not have a fear of undue concentration of banking powers." yeah, how did that work out? another thing, if we go back, now that was '87. go back to '93, cftc exempted certain swap agreements and hybrid instruments from regulation under the commodity exchange act, this was wendy graham, happened to be the wife of senator graham, chair of the head of the cftc at the time but left her term early, two years early to be exact and the date she made the comments about they're not going to hold those derivatives with regard to regulatory issues, that was two days after mr. clinton was president. we're going to have to continue

this tomorrow. i didn't even get to the really funny quotes about barney frank telling us never to worry about the gses and the government doesn't really back them. the gses was at the epicenter of what the dodd-frank was about but thousands and thousands and thousands of pages litter nothing about the gses. you wonder do we really need more regulators? back to you. >> give us the full quotes, barney will be on with maria, today, rick, those will be juicy. >> i'll give you a couple. >> next time. >> the last thing he said in 20 10e was "you really can't tear down the old jail until you've built a new one." the gses are zombies in conservatorship and it's working for us andic. ing the word "jail" how appropriate was that? >> all right, rick, always on it. straight ahead the imax ceo is here for an exclusive interview to talk numbers,

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you don't actually own theaters but you have a lot of partners in movie theaters. what has been the response? it's been a long week for

everybody in this industry. >> i think chris nolan said it best, the director of "the dark knight" said when he grew up movie places were a place you went for safety and a place you went for escape and the real world didn't intrude, and historically that's been the case, and unfortunately, in this instance, though, real world intruded in a horrible way and i think the industry's regrouping. it's a terrible thing. >> "dark knight" a pretty important film in general in terms of the summer box office. what was interesting about this film, there are 72 minutes of footage captured by imax cameras. how does that differ from other releases and how does that mean more money for you in the end? >> chris nolan was the first one that used imax in a feature film for the original "dark knight" filmed 30 minutes of imax footage and the 72 minutes on its own would be the third longest imax movie ever made with imax cameras and it's just so spectacular when you sit in the audience, because the imax

scenes go to our aspect ratio which is much more square than rectangular and your eye can shop around and see the different parts of the action so it's not just being a passive observer. it's more like being in the movie and historically, when more is shot with our cameras that leads to better imax box office. >> let's talk about the box office because you said in various other reports and in the earnings release for "the dark knight" it's been meeting internal expectations. there's an interesting disparity between domestic screens versus international screens and it has been outperforming internationally. why do you think that discrepancy is there? does it have to do at all with what happened in colorado? >> not on our instance because last weekend it's hard to believe we just opened it a few days ago but over the weekend we pretty much sold out every show and every theater and during the week this week for the first few days we've done about 15% of the domestic box office on 330

screens so imax has done incredibly well, internationally the last "dark knight" did two-thirds of the level domestically. this one in imax is doing better internationally than domestically. i think it has more to do with being the third in the series and chris nolan better than he was before so i think it's just part of the trend that international box office is so strong. >> you mentioned on the conference call the quarter was filled with doubles as opposed to home runs. are there home runs in the pipeline? >> i think so. from my point of view i think "the dark knight rises" certainly will be on a home run. it's on track to be a home run. we're doing bond in november, skyfall directed by sam mendes and some of that will have imax dna specialties. we have the hobbit in december and next year we have a lot of home runs but what the second quarter demonstrated was even if you have doubles and not home runs, you can still deliver very

solid results. our results were up on the reported number about five times from a year ago. >> right and quick macro question, are you seeing any slowdown in terms of insulation of imax screens around the world in of, in europe or in asia? >> no. >> you're not? >> not at all? >> signings for the quarter were terrific future commitments. it's not affecting us, partly because it's an affordable luxury so you might cancel a vacation or expensive restaurant. >> got to do something. >> exactly. >> rich, good to see you. rich gelfond, ceo of imax. the european close is coming up next. accolade overdrive.

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the european markets are closing now. [ bell ringing ] >> let's go to simon. >> look at the green. look at the figures on the green, see how much that europe has bounced today. big figures. look at that, 5% down there in italy, notable that greece is in the red. will greece still live the eurozone in a very important day for people in the market believe there's only one institution with credibility in europe, and only one institution, if it chooses, with deep enough pockets, to turn around the situation in europe, and that is the ecb, when you hear these words and we make no excuses for playing you again what mario draghi said today because it potentially is so important and people really have to debate exactly what the implications of it are.

listen to what the man said. >> within our mandate, the ecb is ready to do whatever it takes to preserve the euro, and believe me, it will be enough. >> "it will be enough." is he right? let me just show you the market reaction to that, the analysis we'll come back to. look what happened to the short end of the spanish bond market. you had that rapid ascent of yield, short end is where the spanish borrowed a lot of their money, that was unsustainable, it is still very elevated at 3.75% but it's a notable move on the yields and you can see it across the spectrum in spain. you will see here that the yields on the ten-year in spain has now fallen below 7%. arguably it's still unsustainable but all this is, is a statement of intent from the ecb. they haven't started buying in the market. that's the reaction solely on that verbal intervention from

mario draghi. look at what happened to the stock markets, the major stock markets in europe today and you'll see the way in which they were able to put on a huge amount of leverage as a result of what the man said in london and indeed if i take you over to some of the peripheral markets, spain and italy, inevitably the move there, i mean check this out, the move there has been greater as you can see. we've gained almost, over 6% in spain, the big multinationals like retsal the oil giant bouncing around with the rest of the banks, let me show you for example santander, you can see the degree to which it has made gains today. here you can argue on the euro about short covering. i'm not sure that applies to spain and italy because they had the short selling bands. is that genuine buying? i don't know the answer to that but it may be a difference. it's certainly almost 10% and santander is a powerful move and you can see the degree to which other spanish financials have

gained. bbva up over 10%. italy, the italian banks, how they have moved on what draghi is saying. all these banks hold huge amounts of spanish and italian sovereign debt. it's big on their balance sheets, losing value on the balance sheets. if he's going to support it, it is clearly good for those banks. 8%, 8%, 8%, 7% gain there on unicredit and generall hugely exposed. other banks around europe we have spoken about the french banks many times, you'll see the degree to which bmp paribas jumped. many say show me the money, draghi. actually it means nothing, the price action is significant. melissa, back to you. gary kaminsky is here with advice on how to invest right now. >> we'll get to correction

protecti protection, one of the producers wanted to talk about that but listening to simon talk about the moves in europe today it's downright silly. we get a comment out of draghi, the moves we're getting out of europe which affect the global markets based on commentary, i could say other words, i can't say them on tv but it's just downright silly. i want to reference an interview i read last night with david stockman, budget director in the reagan administration, been on the network warning of what he sees problems around the world. let's bring up the q&a and this was with, the interview here was about gold, from a gold blog, read this. "where else do you invest in today? i'm preserving capital. i'm in cash. i don't think the risk of the system is worth it. so you're practicing what you preach 100%? david: yes." what's my point here? i was asked about correction protection if you're concerned about what's happening in europe, you're very concerned about the elections here in the states, you want to diversify in the sense you want to have a

cushion. my experience is such it doesn't make sense to play games and be tax efficient. lot of people say i have the long-term capital gains, want to harvest them. years ago people tried to short against the box. there's a lot of different strategies but my experience is simple, melissa, cash, c-a-s-h. if you need to take protection, forget about taxes, in the long run it's not going to make a difference. if you don't like what you see on the tape and don't like what you see in terms of the news flow, raise some cash. you will always be able to come back. the great thing about capital markets is they're open every day, very liquid, open every day. raise cash if that's your concern, that is my advice with correction protection. >> but gary that's it a negative yield. you're going to be losing money. you're not even keeping up with inflation. i know inflation is low but -- >> who cares? who cares? >> and your view is to keep cash in the bank account and lose money. >> who cares? the other people buying the high paying dividend stocks because they want the 4% coupon. >> how about tax immuneities.

>> or treasuries. the bull market continues. >> because cash gives you the flexibility of not dealing with transaction costs if you want to revisit it later on. cash doesn't lock you into any specific product, kinds of products sandy weill tried to sell you a decade ago. >> when you were an asset manager did you tell people to go into cash? >> we managed portfolios. if our near term concerns in the marketplace were to have a higher than normal cash cushion, we managed the money. i mean, we were, we had discretion on the assets, so i didn't tell people to go into cash. i did it myself. >> hmm. interesting. big calls these days, big calls. you still believe the ten-year will go below 1%. >> i do. do you disagree with that? >> i'm fascinated at the call. i'm just -- i'm a student of people like you. let's leave it there for a moment, gary. going to bring in bob pisani who wants to talk about the dow up 173 points. >> highs going into the european

close, i want to note the quality of what the sectoral gains, you want to think what mario draghi is saying, i'm going to do anything to save the euro, we would have seen material stocks up, big industrial stocks leading the charge, that's not really what's been happening. it's telecom, for example, are leading the group here, energy to a lesser extent because we're getting some move up in oil but financials and look, industrials and materials are sort of weighed down here. they have a bigger weight than telecom in the s&p but my point is you think you'd get bigger advances in the big international names and we're not getting that and the reason is because there's real concern over the earnings picture. the numbers keep coming down and they've been coming down again today. put up the earnings situation. for the second quarter so far this year, basically we're going to be down fractionally. that's not the big concern right knew. put up the s&p for the earnings 2012 and you'll see we're not going anywhere right now. the big concern is on the second half of the year, q3 and q4,

right now, we're on the downside, looking at basically flat, and earlier in the year, earlier in the month for q3, we were looking for them to be up a little bit. now it's going to be the downside. q4 is not looking very good, only up about 12%, prior just three weeks ago we were looking for q4 to be up 16%. these are statistically significant numbers so the second half numbers are slowly starting to come to the downside. here is what i was looking for here. 12% now, we were 16%, just a few days ago for q4. now we're flat in q3. few days ago we were expecting to be up 6%. comment on housing, we're getting numbers that are disappointing but i'm not sure that's changing the actual way the housing stock market changes here. put up the housing numbers, i think you'll see what's going on here. number one we're below expectations on pending sales today, existing and new home sales but housing starts have been okay. why is this happening? we're getting housing starts

near four-year highs. i think we're seeing the publicly traded builders are getting spectacular numbers, getting a bigger share of the overall pie. meritage was seeing growth today of 8%. pultegroup, growth of 32%, a spectacular number. even if you get a slowdown in housing they're getting a bigger, bigger share of the market pie and the important thing is, that's why these stocks keep going up, even with kind of eh housing numbers. so you can play this both ways. gee i'm not delighted with the housing starts numbers, these guys keep getting more and more of that overall pie. that's why we've got new highs. >> have you seen twitter may be down? >> really? >> twitter may be down, we're trying to figure out what's going on. >> uh-oh, sound the alarm as a

non-twitterer. we head to chicago to rick santelli. >> i was going to have mark grant but technical issues, that's live tv and he's always good with europe. everybody is digesting the same thing. we're all looking at mario draghi's comments, but i'm going to take a different slant. you know, first of all i look at 143 tenure, we're up several basis points from the high 130s, intraday yield lows yesterday but not huge. we do see boone yields up in the low 130s and i believe they were in the one-teens on the record lows so we're losing a little ground on that spread, not so much a big deal but what the big deal really is, is whether we're talking taxes in the u.s. or central bankers comments like mario draghi, what's most upset being these, even though the market's less upset is the fact that you need somebody in the capacity of the heads of a central bank to tell you the information, i guarantee you this or that. what makes the whole system of finance work globally and the

united states is the leader in this, continuity, predictable, rules based. you don't have to make announcements every couple of months about what your tax code is or whether paper of spain is good or not or central bank is going to buy them. there's supposed to be a process of market-driven predictable interims. without those, any trigger where there's a glitch in financing, similar to what we saw in '08 make statements by mario draghi probably much less important. back to you. >> rick santelli, thanks. let's get a market flash, mary thompson. >> we have been taking a look at shares of the "new york times" up a penny from estimates. the company saw increase in subscription revenue, its efforts to get more people to pay for their online services is working. that helped to offset a slight decrease in ad revenue which it sees rebounding in the third quarter. back to you. straight ahead the very first interview with mcdonald's

new ceo, carl sat down with him in london. good afternoon, carl. >> hey, simon, good morning to you guys. you're right, he is one of the most talked about ceos in the country, don thompson, the new ceo of mcdonald's, his first interview since taking that job a few weeks ago after a tough inaugural quarter. we'll hear from thompson after a short break. g the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ...forbusiness.com. [ yawning sound ] i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company.

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welcome back. coming up on the halftime show s

facebook about to post an earnings beat? we'll explain which part of the market is turning bullish and if now is the time to buy. rumor for reality? reports on apple could mean bad news for anyone waiting on the latest iphone. will amazon deliver when it reports after the bell? a four-star investor weighs in. see you in about 15 minutes. >> look forward to it, wapner. we're one day away from the opening ceremony in london. carl quintanilla, you mansiagedo find the new mcdonald's ceo in london. >> opening ceremonies tomorrow night, but you also know that the olympics are often a coming out party for various companies, various olympic sponsors, mcdonald's of course is an official sponsor, a global sponsor and so today we caught up with don thompson, one of his first weeks on the job, as they unveiled the mcdonald's here in olympic village, the largest in the world, 32,000 square feet, a staff of 500, one of only four around olympic village and

afterwards it will be deconstructed and parts of it will be used in existing mcdonald's or recycled somehow, part of their sustainability effort but of course with thompson, you got to talk about the recent quarter, right? we've talked a lot about the fact that in his inaugural quarter it is tough going. the first miss in a very long time on the bottom line, tough guidance for the coming or second half of the year, so we started by asking him whether or not after all of jim skinner's success, he feels like he's been dealt a difficult hand. >> i just view it as a hand. mcdonald's is a tremendous business, we have a tremendous team. jim and i and the rest of the team relative to the strategic plan itself, we all put that in place. jim gets credited with so many things which he would say with all of us. i get credited with beginning mccafe, i would say it's all of us, it originated in new zealand and australia and just changed it a little bit for the u.s., so we have a very talented team in

place, a solid strategy, strategic plan. we happen to be in a tougher global economic environment but historically we've done well in the environment. we'll continue to leverage the experience we have with the senior leadership team around the world and move forward. am i inheriting a tougher business, if you would? no, it's just mcdonald's and the consumer business. it's the restaurant business. we'll continue to execute the strategies we have and listen to customers, and that will help us to migrate through these times. >> looking at the quarter, people were thankful for that last month, right, because the trends weren't good the first two months and people thought maybe we saw a little acceleration in the back third of the quarter. indicative of what the second half may be like, comp. spot th bottom for the year? >> we gave guidance relative to or thoughts relative to july in terms of the fact that it would be positive, albeit less than

what we had seen in the prior quarter. i think what we can, what people can look forward to is the fact that at mcdonald's we're going to continue to invest in value, which we've done. one of the things that we've done that really helped us was we had some changes in australian values, some changes in germany in value. we have to continue to resonate with customers on that value platform but many have asked is that the only thing you guy also do? absolutely not. we'll continue to sell beverages. we'll continue to sell premium based products but we've got to make sure we're in tune with where our customers are from a disposal income perspective. where will things be at the second half? there's no doubt the third quarter will be challenging, as we've mentioned, but we're very assured that our business model will still hold true, as it has over the years, and you know what? we'll manage through this cycle like everyone else is, try to focus on customers, try to if he cuss on gaining more market share in these times and build the business for the future.

>> so they just don't have the street to worry about. they don't have slowing global sales to worry about. they also have critics to worry about here at the olympics, guys, the academy of royal medical colleges has said that having mcdonald's sponsor the games sends the wrong message. they say the same thing about coke and heineken, so as a result at this store they unveiled today, talked a lot about the fact that if you look at certain markets, the happy meals that they sell, the amount of fruits and vegetables is up four-fold in the last couple of years, very important to them. new initiatives coming up, you'll be able to look in the restaurant at a certain kind of bar code on a product that you can then go to the website or your mobile app to get even more nutritional information about smoothies and fries and so forth, so all these years after supersize me guys, they're still having to answer the critics and don thompson has a lot more on

his plate than just that. olympic stadium behind me over my shoulder and we'll be giving you a lot more as we get closer to opening ceremonies tomorrow monk your ti morning your time. >> in the fairness of sport, who else has deep enough products or deep enough pockets to finance this sort of sponsorship? this is a big deal. this is why certain sports function, not the olympic games, it will just pay down london's bill a little bit but they have phenomenal power. at least they bring it in a can-do kind of atmosphere, carl. >> it's true. they've been a sponsor for 36 years. interestingly, simon, i thought you'd like this, talking about regional products unveiled in the coming months and quarters, porridge in the uk. i don't think it's going to be coming stateside for a while or any time soon. >> no, i imagine not porridge. big in scotland. carl, looking forward to tomorrow, carl quintanilla there. >> miss you guys, talk to you soon. online photo service

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time to look at online photo service shutterfly, trading higher after reporting $9.5 million loss in the second quarter, not as big a loss as many on the market thought it would come through with. here is jeffrey housenbold, president and ceo of shutterfly. congratulations on the results.

welcome to cnbc, sir. >> thanks, simon. >> how much of what we're seeing now is about cost control and how much is about revenue and pricing power? >> you know, we had another very strong quarter during the second quarter of 2012. we grew 31% on the top line, and we beat the street on the bottom line as well as we saw strength across both consumer and enterprise. most of the overdelivery on the bottom line was a result of stronger revenue. >> i see there is some concern though with the kodak migration, and indeed when the holiday preparation will start. can you talk us through that? >> what we said on the call yesterday was we're actually ahead of schedule on, my grating the more than 5 billion photos from kodak customers to add to our 10 billion photos from shutteren fly. we're ahead of schedule on that and very confident from the revenue we'll get from the customers in the fourth quarter. >> at the same time, jeff, a lot of people look the at the business and think how many people print photos when you

have a platform like facebook where you can share photos digitally and have a digital scrapbook. are you seeing an impact and how are you protecting yourself against what seems to be a secular shift in photos? >> you know, actually, melissa, people are printing more. we saw 8% growth in even our prints, which has been around for over a century. as people are taking more and more pictures and have their mobile cameras with them all the time, and as shutterfly becomes more per advicive and we build out consumer brand people are turning those pictures into everlasting photo based gifts and products and as the market leader we see continued strength as we're going to approach 582 to 592 million dollars this year alone. >> what about treat.com with the personalized greeting service. i see you'll take it mobile. what are your expectations there? because the substitution seems to be quite a low price, it's $3 to $5 to buy a greetings card. >> i think you hit it on the head, simon.

we think treat is a better value proposition than going into a retail establishment and buying a static card for $3 to $5. with treat you can personalize thousands of cards, add your own personal touch, add photos and we'll mail it to your recipient for as lows adz 1.99 and the convenience of being able to do that from your pc and soon from your mobile device we think is going to change this industry forever. >> jeffrey, thank you for joining us. jeffrey housenbold there, president and ceo of shutterfly. it's my christmas card, all online. we have eased off the highs of today's rally, the nasdaq now up but under a percent. much more on the market straight ahead. and the first trade route to the west. we built the tallest skyscrapers, the greatest empires. we pushed the country forward. then, some said, we lost our edge.

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